Is it Time to Invest in MassRoots (OTCBB: MSRT)?
MassRoots: It’s all about the Data
With so many social networking sites disallowing cannabis companies access to a world of potential customers, the cannabis industry has taken it upon itself to create its own social networking world.
One public company that got an early-mover advantage here is MassRoots (OTCBB: MSRT).
Now I’ll be honest. Early on I was not particularly impressed with the platform. I found it to be a bit wonky at times, and aesthetically it came off as a bit amateurish. But the platform did eventually evolve, and I like it much more now.
That being said, as an investment, I did stay away. From a technical standpoint, there were just too many red flags, including a high burn rate and limited advertising revenue generated. Even today, it’s a fairly risky stock. But MassRoots is making some progress.
The one thing I do like about MassRoots is that it’s not a company run by a bunch of stoners with a “cool idea.” These guys are tech leaders all the way, and even boast some pretty impressive board members that are considered among the Silicon Valley elite, including James Veraldi of Snapchat and Anthony Nystrom of Mashable.
What I do like about Massroots is that management understands the value of data analytics and data management. This, if monetized properly, will be how the smart money will value the company.
It's all about the data
Right now, Massroots is aggregating data from hundreds of thousands of cannabis consumers. For a market that’s growing faster than anything else on the planet, this data is worth a fortune. Truth is, I suspect the value of the company’s data is far more valuable than its ability to sell advertising.
Eventually, social networking sites like Facebook and Instagram will get into the cannabis game. I'm sure they'd love to be in it now, but like the big banks, they’re not going to make any serious moves until we see more interest from the Fed in terms of legalization.
So in the meantime, you have a company like MassRoots that, in my opinion, would ultimately be a very lucrative acquisition target for a tech giant like Facebook or Snapchat.
Now last month I took another look at MassRoots, just to see how the company was progressing. And things are coming along. Here’s why …
- The company officially surpassed 1 million registered users on its platform.
- After having its mobile app removed from Google Play in November, it has since been restored. While the app was absent from Google Play, the company had to delay the launch of its new targeted advertising feature, which, quite frankly, is pretty valuable.
- The company, through its acquisition of cannabis software provider Whaxy, will have new revenues to report soon. Those revenues could not be reported in its last earnings report because the acquisition didn’t close until January of this year.
- In March, Massroots raised $2.9 million through warrant exercises while retiring all of its $1.5 million of convertible debt outstanding. This comes on top of a Q4, 2016 raise of $5.5 million. The company is in much better financial shape today than it was last year. It should be cash-flow positive this year.
But let’s get back to the data angle.
This morning we learned that MassRoots has partnered with Grownetics to provide reports and analysis to cannabis businesses. Grownetics is a company that focuses on cultivation automation and optimization for the cannabis industry.
This news comes after the MassRoots’ January acquisition of Whaxy, which provides a menu management and online ordering system for dispensaries.
It should also be noted that last month, the company announced it had partnered with New Frontier Data to put together a report that’ll extract business intelligence from cannabis consumer data.
A lot of people look at MassRoots as little more than an online platform for cannabis enthusiasts. But it’s looking more and more like the company is focused on becoming a Big Data player in the cannabis space. And that’s what gets me interested.
Although MassRoots is not a stock for the risk averse, based on the potential value of the company’s data and data analytics, it could be worth a lot more than where it’s trading right now.
Today, you can pick up shares of MassRoots for about $0.70. I think it’s worth at least $0.90. And that’s where my price target is. Hitting $0.90 this year would put it up 28.5% from where it’s trading right now.
MassRoots is by no means a sure thing, but it’s a hell of a lot more interesting today than it was it was a couple of years ago.
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